Greece: could debt deal be scuppered from above?

There’s Che Guevara, Joseph Stalin and some very angry pensioners. I’m on the first of the street demonstrations – there will be many more – to take place since Alexis Tsipras attempted to sign a deal with the IMF and ECB over Greece’s debt repayments.

This demonstration, which is 2-3,000 strong, has been called by the Greek Communist Party, the KKE. They bussed in pensioners from over 70 towns in Greece to oppose one of the measures and indeed most of the measures in a deal Tsipras has signed up to.

As far as we know, because the documents are neither finalised nor official, Syriza has signed up to a further 1bn euros of austerity to bridge the gap between it and its lenders, and the new measures include asking people to contribute more towards their pensions, including employers’ contributions but also workers’, and some cuts at the top end of pension provision.

That’s been enough to bring the communists on to the street. They got 5 per cent of the vote in the last election and if this is all Alexis Tsipras has to worry about, he’s home and dry.

But many of his own rank and file, including many young people, also oppose the deal. The left wing of Tsipras’ own party – because his party is a coalition of communists and socialists – have put out a statement denouncing the deal, saying it contains terrible concessions

The question tonight then as the pressure comes on from the party rank and file is whether or not the negotiators in Brussels can hold their nerve because they are also under pressure from the IMF, which, although it is part of the so-called Troika, has a very different attitude to the deal from the European Commission and the ECB.

Because the IMF cannot sign up to deals that are non-sustainable and many objective economists believe this deal is non-sustainable, a stop gap.

The banks remain open because the European Central Bank is keeping them open, and the bank run has lessened today – only 400m euros out of the banks, compared with 1.4bn the day before.

But the level of pressure that’s being exerted on Syriza right now, I don’t think is enough to derail a deal from below. The biggest concern remains whether the IMF’s pressure for more assurance, and more what’s called debt sustainability, will actually scupper it from above.

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9 reader comments

Margaret Eleftheriousays:

I also fear that this could be scuppered from above. Ms Lagarde’s body language is pretty revealing. Today she swept in, extending her hand regally to those in the waiting welcome line, all of whom inclined their heads as the only correct response. It is to me absolutely incredible and unacceptable that no one at that level, even brings up the undeniable and internally acknowledged fact that actual accounting mistakes and forecasts were made in respect of the effects of IMF policies on the Greek economy. Why nothing about this any more? Why this almost genuflecting towards Ms Lagarde? Under her supervision, the IMF also broke its own rules, about lending when the debt is unsustainable.
Yes, I too fear that this deal, which is the least bad alternative right now, could well be scuppered by the intransigence of HRH Lagarde.

As in Ireland are a lot of these debts speculators debts and not those of the ordinary souls who are made suffer austerity to keep french and german banks solvent. Surely debt forgiveness is reasonable if the german people are educated about the true source of some of this debt or would it not be feasible politically for the eurocrats to muddy the water with truth?

Eurostat and the European comission failed to regulate greece from 2004-2007 so are partly to blame for the size of Greeces debt. They should be giving some debt forgiveness once reforms in place. Debt forgiveness was promised to Ireland in europe during negotiations but this has not come to pass.

The propaganda is so thick these days, it’s become blatant. That’s the plan though, discredit the orgs like CB’s and IMF so we can usher in an all knowing global power like, oh I dunno….the UN with their Vatican kingmakers?

Just a hunch.

PS: Mr. Mason, you and your ilk won’t fare so well in the next crash, though you think you will. You won’t. Not a threat, a prognostication.

This Syriza should not be allowed to win one thing. That is to say that the conditions of bailing out should be close to the ones promised by Greece’s previous government. Otherwise, the leftist parties in Europe will follow. Therefore, there will be more troubles ahead. As such, the troika should not concede a single thing. Let this Syriza fails. This is cancer. Cut it now or cut a bigger tissue later

I have to agree with Mick.
What has the IMF been doing in Greece for 5 years
if not strangling the economy? and helping oligarchs
buy up stuff at fire sale prices?

If the troika can keep their claws out of each other’s
eyes, they might just keep a lid on this crisis.

The Greek banks have money only because of the
prime directive to keep liquidity, worldwide. So, any
threat of capital controls and the like is just bluster.
Without liquidity, the creditors will be the first to fall.